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VAT-lottery receives warm response
KATHMANDU, JAN 19 - Government’s recent announcement to award lotteries against VAT bills received warm responses from the consumers. But the experience, so far, has asked for some changes in the lottery ticket issuing modality.
"In three days’ time the scheme has been able to issue raffle tickets against VAT bills worth Rs 439,000," Rup Khadka, National Advisor to Revenue Administration Support Project informed The Kathmandu Post today.
Khadka added that the issuance of 439 tickets is more than what they had anticipated for. "We were in a view that the first couple of days would market the scheme, but people begun responding from the first day," he said.
The government on last Thursday announced 16 cash prizes against VAT bills - the one first prize worth Rs 100,000, two cash prizes worth Rs 20,000 each, three worth 10,000 each and ten worth Rs 3,000 each.
As per the current modality, a consumer will be issued one raffle ticket against VAT bills worth Rs 1,000. From the raffle ticket, 16 winners will be selected from lottery system every month, initially for the next three months.
Experts have pointed out that the major drawback of the current modality of raffle tickets has been the seizure of original bills. People ask for the bills back, but the current practice does not allows that.
"Scores of people do not want to leave their purchase bills because of warranty and validity of the products," Khadka concedes adding that they are giving a thought to revise the system and accept Xerox of genuine bills.
The scheme is aimed at encouraging consumers to ask VAT bills while purchasing goods. The latest announcement comes after the failure of several awareness campaigns and less than expected outcome of electronic advertisement.
Avanindra Shrestha, Director General of Inland Revenue Department (IRD) hopes that this mechanism would be helpful to cross check the retailers if they are filing up false tax returns to the IRD.
"The main target, however, is to make people ask for an abbreviated or a genuine VAT bill with a detail of retailer and its registered Permanent Account Number (PAN), he added.
Experts believe this will help develop VAT as the backbone of Nepali revenue system. They further add that the attraction of Rs 100,000 can even help in checking under valuation of goods at the customs point.
The weak enforcement of billing system has marred the success of Value Added Tax (VAT), which the government had enforced in 1997 hoping to mobilize almost 40 per cent of total tax revenue from this new tax system.
The VAT revenue currently makes 24 percent of total revenue mobilization and 2.96 per cent of GDP. Of the total VAT revenue, 64.8 per cent is collected at customs and the remaining 35.2 per cent in the domestic market.
Though noble attempt in Nepal, the system is not new to the world. Countries like Argentina, Turkey, Thailand, South Korea, and many others countries have already tried with the lottery system in VAT bills. While some failed, some are gaining from it.
Currently, around 30,000 firms have been registered with the Inland Revenue Department for VAT. This figure, the expert claim, is less than 30 per cent of total VAT-potential firms of the country.Posted on: 2004-01-20 03:42
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